annual report 2013 2014 mr.mongezi mnyani chief executive officer [email protected] committee...
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ANNUAL REPORT 2013 2014
Mr.Mongezi Mnyani
Chief Executive Officer
Committee Room V454,Fourth Floor
Old Assembly Building
15 October 2014
Table of Contents
• Vision and Mission• Strategy• Strategic Objectives• Products and Services• Governance and Objects of Council• Governance• Trends for complaints lodged and resolved• Conciliations handled
Table of Contents
• Organizational Structure • Enrolment categories• Overview of performance for 2012/2013 and
2013/2014• Registration and renewals non-subsidy sector• Average % renewal of registration• Non-Subsidy enrolments• Plans approved vs homes enrolled• Non-Subsidy late enrolments as % of non-
subsidy late enrolments
Table of Contents• Non-Subsidy inspections and houses inspected
• Remedial works done per stage
• Home Enrolment and Project enrolment Subsidy sector
• Subsidy inspections
• Homebuilder training
• Training of homebuilders by categories
• Youth trained in past seven years
• Employment equity
• Disciplinary Committee Hearings held
• Code of Conduct matters
• Recoveries
• Audit progress update and business response
• Auditor general assessment of NHBRC control environment
• Actions plans 2014/2015 to resolve issues
• Performance Information
• Budget
Vision and Mission
VISION•A world class home builders’ warranty organization that ensures the delivery of sustainable quality homes”
MISSION•“To protect the housing consumer and regulate the home building environment by promoting innovative home building technologies, setting home building standards and improving the capabilities of home builders”.
PAY-OFF LINE AND COMMITMENT•“Quality is our Priority”
Strategy
STRATEGY•To improve visibility and accessibility in the market while enhancing interaction with our stakeholders.
•To position the NHBRC as a leader in knowledge creation, technical and technological building solutions through strategic partnerships.
•To provide diversified services and products in line with changing building requirements and needs
Strategic Objectives of NHBRC
• To grow, protect and sustain the NHBRC warranty fund• To provide innovative quality products and services that
will delight the customer• Strengthen NHBRC operating processes, systems and
procedures• Create a learning environment and build capacities to
products and services
Products and Services
•Enrolment of new homes;•Home builder registration and renewals;•Home building inspections;•Forensic engineering investigations;•Assessment of houses for rectification; •Home builder training and development;•Home building dispute resolution;•Litigation and legal advisory services; and•Geo-technical and materials engineering.
Governance
Committees of Council are as follows:•Industry Advisory Committee•Technical Claims and Advisory Committee•Audit and Risk Management Committee•Human Capital and Remuneration Committee•Registration committee•Bid Adjudication Committee (Tender Committee)•Fund Advisory and Finance Committee•Disciplinary Steering Committee
Structure for 2014/2015
COUNCIL
Company Secretary
Chief Audit Executive
CHIEF EXECUTIVE
OFFICER
Strategy and Performance Information Manager
Risk Manager
Chief Operations Officer
Chief Financial Officer
Fund and Finance
Supply Chain
Executive Manager Business Services
Executive Manager Corporate Services
Legal
Compliance and Enforcement
Business
Management Solutions
Human Capital
Technical
Quality
Assurance
Customer Service
Facilities
Project Support
Unit
Stakeholder Relations Manager
Proposed
Foundation
Communications Manager
Overview Summary of performance
Valuable Final Product (VFP)
Year to date Performance for 2012/2013 Year-to-Date Performance for 2013/2014
Performance
Target Variance % Variance
Performance
Target Variance % Variance
Registration of new Home Builders
2,935 3,332 -397(12%)
3,175 2,974 2017%
Renewal of registered Home Builders
11,558 11,431 1271%
12,447 10,480 1,96719%
Enrolment of homes 204,235 90,119 114,116126%
168,319 250,394 82,063(33%)
Late Enrolment of homes
1,906 1,696 17312%
1,743 1,001 -742(74)
Inspections of homes 336,046 553,740-217,694
(65%)451,324 370,677 80,647
22%
Training of homebuilders
2050 3500 -1450(41%)
1,369 3,500 2,131(61%)
Training of Youth 474 2,000 -1526(76%)
934 2,000 -1.066(53%)
Enrolment categories in Non-Subsidy sector
Category PA003 Sectional Title Speculative TOTAL
0-500k 1,505 11,400 9,011 21,916
500k-R1m 867 9,261 4,492 14,620
R1m-R2m 421 2,960 4,541 7,922
R2m - R5m 186 327 3,267 3,780
>R5m 5 16 620 641
TOTAL 2,984 23,964 21,931 48,879
Registrations and Renewals in non-subsidy sector
Average % renewal of registration over the last seven years
Non-Subsidy Enrolments for the last seven years
Plans approved vs. homes enrolled
Non-Subsidy late enrolment as % of non-subsidy total enrolments
Trends for complaints lodged and resolved
Conciliations handled by NHBRC
Non-Subsidy inspections and houses inspected in the past seven years
Remedial works done per stages
REMEDIAL STAGES NUMBER OF UNITS RECTIFIED PER STAGE
Foundations 6
Substructure 19
Super-structure 48
Roof 3
Drainage 1
Settlement 18
Total Houses 95
Home and Project Enrolment in the subsidy sector over the last seven years
Subsidy inspections
Homebuilder training
Training by categoriesMALES FEMALES TOTAL
HOMEBUILDER TRAINED 821 548 1,369
YOUTH TRAINED 560 374 934
TOTAL 1,381 922 2,303
Youth trained in the past seven years
Employment Equity
Disciplinary Committee hearings
ProvincesSuspensions
Total DC hearings
Not guilty verdict
WarningFine imposed
Registration withdrawn
Matters postponed
Matters settled out of DC
Verdicts outstanding
WC 78 82 5 14 22 6 17 18 0
KZN 15 28 1 2 17 3 4 1 0
GP 23 50 1 21 15 5 2 6 0
EC 14 54 1 7 37 5 0 4 0
MP 5 9 0 2 4 0 3 0 0
LP 36 32 1 3 14 7 7 0 0
NW 8 27 0 8 12 1 4 2 0
NC 4 11 0 7 2 1 0 0 0
FS 19 35 0 2 16 2 15 2 0
TOTAL 202 328 9 66 139 29 52 330
Code of conduct matters handled by NHBRC
Recoveries for 2013/2014
Quarters Amount collected % contribution
First Quarter R303,000 19%
Second Quarter R385,000 24%
Third Quarter R814,000 51%
Fourth Quarter R121,000 6%
TOTAL R1,600,000 100%
Progress update for last three years
Business response• Irregular Expenditure issues prioritised dropped from over R400m to new
reported R24m in 2014. The R24m mainly relates to problems in getting 3 quotes on our travel.
• NHBRC has now come with new travel arrangements to address this problem.
PERFOMANCE INFORMATION• The issues of KPI not being SMART raised in 2012 and in 2013 addressed.• Issue in 2014 was unavailability of POE. This area is being addressed.
Information Technology• We have problems of our legacy system – (Operations and finance) that
have interface issues.• New CIO appointed and has established a Steering Committee to address
the IT governance issues.• Also NHBRC has embarked on an ERP rollout project, expected to go live
by financial year 2015/16.
Leadership role
•CEO through Executive Committee and Management Committee has made Auditor General report a standing agenda item.
•Quarterly reporting by CEO to Audit and Risk Committee and Council.
•Also the Audit report is part of management Balanced Score Cards Key Performance Indicators
A-G ASSESSMENT OF NHBRC CONTROL ENVIRONMENT 2013/14
34
LEADERSHIP
Movement from previous assessment:
1.a Provide effective leadership based on a culture of honesty, ethical business practices and
good governance, protecting and enhancing the best interests of the entity 1.b Exercise oversight responsibility regarding financial and performance reporting and
compliance and related internal controls
1.c Implement effective HR management to ensure that adequate and sufficiently skilled resources are in place and that performance is monitored
1.d Establish and communicate policies and procedures to enable and support understanding
and execution of internal control objectives, processes, and responsibilities 1.e Develop and monitor the implementation of action plans to address internal control
deficiencies.
1.f Establish an IT governance framework that supports and enables the business, delivers value and improves performance
A-G ASSESSMENT OF NHBRC CONTROL ENVIRONMENT 2013/14
Cont…
35
FINANCIAL AND PERFORMANCE MANAGEMENT
Movement from previous assessment:
2.a Implement proper record keeping in a timely manner to ensure that complete, relevant and
accurate information is accessible and available to support financial and performance reporting
2.b Implement controls over daily and monthly processing and reconciling of transactions
2.c Prepare regular, accurate and complete financial and performance reports that are supported
and evidenced by reliable information
2.d Review and monitor compliance with applicable laws and regulations
2.e Design and implement formal controls over IT systems to ensure the reliability of the systems
and the availability, accuracy and protection of information
36
A-G ASSESSMENT OF NHBRC CONTROL ENVIRONMENT 2013/14
Cont…
GOVERNANCE
Movement from previous assessment:
3.a Implement appropriate risk management activities to ensure that regular risk assessments,
including consideration of IT risks and fraud prevention, are conducted and that a risk strategy to address the risks is developed and monitored
3.b Ensure that there is an adequately resourced and functioning internal audit unit that identifies internal control deficiencies and recommends corrective action effectively
3.c Ensure that the audit committee promotes accountability and service delivery through evaluating and monitoring responses to risks and providing oversight over the effectiveness of the internal control environment including financial and performance reporting and compliance with laws and regulations
ACTION PLAN 2014/15
37
Below is high level action plan approved by Exco to address the 2013/14 A-G report issues
AREA ACTION PLAN REPEAT FINDING
SCHEDULED AUDIT PERIOD
UNAVAILABILITY OF SUPPORTING DOCUMENTS
Missing revenue files during the audit Need to address the potential scope limitation that will lead to a qualified opinion.
Implement new filing system on and off site.
No 2nd Qtr to 4th Qtr during Provincial audits
IRREGULAR EXPENDITURE
Goods or services with a transaction value of more than R500 000 not procured by means of a competitive bidding process.
Audits will be conducted as per timeframes.
Capacity Building and Training programmes developed for all SCM employees.
Check list for SCM employees developed to utilise when processing request from Business Units.
YES 2nd Qtr
.Goods or services with a transaction value of R 5 000 up to R 500
000 procured without inviting at least three written quotations from
prospective supplier
2nd Qtr
Invitation to bid not advertised as per Treasury Regulations 3rd Qtr
Irregular expenditure not disclosed. 3rd Qtr
Staff conflict of interests 4th Qtr
ACTION PLAN 2014/15 cont.
38
PORTFOLIO OF EVIDENCE
(Disclaimed) No POE led to disclaimers
reliability of home enrolments,
compliance
and training
Audit will assist Strategy and
Planning in ensuring that
managers are trained on the
process of loading POE.
Developed systems to collect
and file all supporting
information on monthly and
quarterly basis.
Review Performance
Agreements of all Managers to
include KPIs on Performance
Information.
Yes( Area was matter of emphasis in prior year)
2nd Q
(Qualified) Poor POE impacting on reliability of
Registrations, renewals
and Inspections were qualified.
3rd Qtr
Limitation of scope due to insufficient POE was also sighted
and almost led to a qualified audit opinion.
To be covered during the above 2 audits
ACTION PLAN 2014/15 cont.
39
AREA ACTION PLAN REPEAT FINDING
SCHEDULED AUDIT PERIOD
INFORMATION TECHNOLOGY
Non-compliance to IT Governance controls relating to the IT
Steering Committee.
The IT Governance framework has not been approved by council.
Inadequate user access controls defined for the Oracle database
environment and Oracle E-Business Suite application
environment.
Controls over user access creation and removal do not on the
Oracle E-Business Suite application.
Inadequate IT security controls defined for the Linux operating
system environment.
Inadequate IT security controls defined for the Oracle E-Business
Suite application environment and Oracle database environment.
Non-compliance to change management controls.
Inadequate network monitoring controls exist.
Non-compliance to the disaster recovery policy.
Audit will work with the CIO in
addressing these findings. Quick
wins will include the formulation
of the IT Steercom and
governance issues.
Comprehensive Information and
Communication Technology is
being drafted for implementation
across the NHBRC.
YES 2nd through to 4th Quarter
ACTION PLAN 2014/15 cont.
40
This action plan is driven and co-ordinated by
•Finance;
•Strategy development and monitoring; and
•Internal Audit.
Reports will be tabled regularly to EXCO for onward submission to Council.
Performance InformationKPA KPA
BUDGET
KPI NO
KPI KEY ACTIVITY YEARLY TARGET
TARGET MET /NOT MET
ACTUAL ACHIEVEMENT
REASON FOR VARIATION
1. Registration R4.3m 1.1 Register a total of 2,975 homebuilders with NHBRC.
Register homebuilders
Issue a certificate
Register a total of 2,975 homebuilders with NHBRC.
Target met A total of 3,175 homebuilders were registered with NHBRC
This is attributed to expectation of government tenders.
2. Renewals of registration
R6.2m 2.1 A total of 10,480 homebuilders to renew registration with NHBRC
Renewal of registration
A total of 10,480 homebuilders to renew registration with NHBRC
Target met A total of 12,447 homebuilders renewed their registrations with NHBRC.
This is attributed to expectation of government tenders.
3. Enrolment R395m 3.1 Enrol a total of 40,094 non-subsidy homes with NHBRC
Enrol homes Issue of
enrolment certificate
Enrol a total of 40,094 non-subsidy homes with NHBRC
Target met A total of 48,891 enrolments of homes were done in the non-subsidy sector.
This is attributed to an increase in demand in financial interventions programme rolled out by Government in most provinces.
4. Late Enrolment
R512,000
4.1 Late enrolment of 1,002 homebuilders with NHBRC.
Late Enrolment
Issue out an enrolment certificate
Late enrolment of 1,002 homebuilders with NHBRC.
Target not met A total of 1,743 homes were enrolled late with NHBRC in the non-subsidy sector.
This is due to homebuilders failing to submit the required documentation on time.
5. Subsidy Home Enrolment
R128m 5.1 Subsidy home enrolment of 210,300 units with NHBRC
Subsidy home enrolment
Subsidy home enrolment of 210,300 units with NHBRC
Target not met A total of 119,440 homes were enrolled in subsidy sector.
This is due to NDHS slowness in rolling out the projects.
6. Subsidy project enrolment
R63m 6.1 Subsidy project enrolment of 61,419 units with NHBRC.
Subsidy project enrolment
Subsidy project enrolment of 61,419 units with NHBRC.
Target not met A total of 26,719 homes were project enrolled with NHBRC in subsidy sector.
This is due to NDHS slowness in rolling out the projects.
Performance Information7. % reduction in the building of homes outside agreed standards and norms
R1m 7.1 80% of prosecution of homebuilders violating building standards and norms
Enforcing compliance and enforcement of regulations with NHBRC.
80% of prosecution of homebuilders violating building standards and norms
Target met A total of 93% of homebuilders were prosecuted for violating the Act/regulations of NHBRC.
Team ensures that they meet the turnaround times as stipulated in balanced score card.
8. % compliance with building norms and standards
R3m 8.1 100% issue of interdicts to violating contractors to enforce compliance with building standards and norms.
Issuing of interdicts to contractors violating the building norms and standards
100% issue of interdicts to violating contractors to enforce compliance with building standards and norms.
Target met 100% achieved. All matters received were resolved without going to court because builders have subsequently complied with Act.
Interdicts are measures of last resorts hence team focuses on ensuring compliance by defaulters.
9. Training of homebuilders
R8.2m 9.1 A total of 3,500 emerging homebuilders to be trained
Training of homebuilders
Issue of training certificates
Courses accredited with CETA
A total of 3,500 emerging homebuilders to be trained
Target not met A total of 1,369 homebuilders were trained by NHBRC.
Delays in advertisement of tender.
10. Training of Youth
R4.7m 10.1 A total of 2,000 youth to be trained on construction skills
Training of youth Issue of training
certificates
A total of 2,000 youth to be trained on construction skills
Target not met A total of 934 youths were trained by NHBRC.
Delays in advertisement of tender.
11. Inspection of non-subsidy to be undertaken
R45m 11.1 A total of 160,377 non-subsidy inspection to be undertaken.
Non-Subsidy inspection to be undertaken.
A total of 160,377 non-subsidy inspection to be undertaken.
Target met A total of 221,107 homes were inspected in the non-Subsidy sector.
Team ensures that all homes enrolled with NHBRC are inspected.
12. Inspection of Subsidy to be taken.
R170m 12.1 A total of 210,300 Subsidy inspections to be undertaken.
Subsidy inspections to be undertaken.
A total of 210,300 Subsidy inspections to be undertaken.
Target met A total of 230,217 homes were inspected in the subsidy sector.
Team ensures that all homes are inspected by NHBRC.
Performance Information13. Improvement in media confidence level in the NHBRC
R2m 13.1 100% handling of NHBRC medial queries
Responding to media queries
100% handling of NHBRC medial queries
Target met A total of 211 (100%) media queries were received in the year and were all resolved.
The team ensures that all media queries are resolved with immediate effect.
Improvement of the organizational climate
R2.1m 13.2 100% production of quarterly newsletter
Compilation and finalisation of the newsletter
100% production of quarterly newsletter
Target met An indaba was produced and published in every quarter.
Team ensures that the targets are achieved.
Improvement of the image of the NHBRC.
R2m 13.3 65% improvement of the NHBRC perception survey
Gauging the level of NHBRC acceptance in the market
65% improvement of the NHBRC perception survey
Target not met The perception survey was not conducted in the quarter.
Delays in securing a company that can conduct the survey.
14. Home building manual
R298,000 14.1 100% review and publication of the homebuilding manual
Review and publication of the home building manual
100% review and publication of the homebuilding manual
Target not met 75% of the home building manual was reviewed and published.
There is a legislative process that needs to be done.
15. Enterprise Resource Planning
R16m 15.1 80% Implementation of ERP Solution
Implementing the Enterprise Resource Planning
80% Implementation of ERP Solution
Target not met 35% completion of the ERP Solution
None adherence to project deliverables and SAP quality standards from the implementor.
16. Research Publication
R500,000 16.1 4 Knowledge management technical publication produced based on research
Production of research publication
4 Knowledge management technical publication produced based on research
Target met A total of four publications were produced.
The articles were all published in Indaba magazine.
Performance Information
17. Improved governance and organizational accountability
R1.7m 17.1 100% adherence to the risk management plan
Improve governance
Improve accountability
100% adherence to the risk management plan
Target not met 80% of the risk management plan was achieved
High staff turn over
17.2 100% resolution of risk identified by category
Identify risks per division
Timeframes established for the resolution of risks
100% resolution of risk identified by category
Target not met 60% of the risk identified by category were resolved achieved
There was a gap at Executive Management level.
17.3 6 divisional risk education events completed.
Preparation conducted for educational events
6 divisional risk education events completed.
Target met A total of six divisional risk education events were completed.
The division executed the risk educational events according to the plan.
18. Zero tolerance for fraud and corruption
R150,000
18.1 6 fraud prevention seminars to be carried out with divisions
Preparation conducted for hosting of seminar
6 fraud prevention seminars to be carried out with divisions
Target not met The division did not conduct the fraud prevention seminars for the year
Did conduct Fraud prevention talk at induction program
18.2 100% prevention and identification of fraud incidents
Compilation of fraud incidents
100% prevention and identification of fraud incidents
Target met The division prevented and identified the fraud incidents within NHBRC.
All reported incidents acted upon
18.3 100% investigation and resolution of the fraud incidences from the Hotline.
Investigation of reported cases
Resolution of the investigate cases
100% investigation and resolution of the fraud incidences from the Hotline.
Target met All the cases from the hotline were investigated and resolved for the year
The divisions executed and resolved the cases as they came in.
Performance information19. Reduction of audit queries
R200,000
19.2 100% audits conducted in accordance with the audit plan.
Auditing the business of the NHBRC.
100% audits conducted in accordance with the audit plan.
Target met 100% audits conducted in accordance with the audit plan
19.3 100% resolution of audit recommendations within agreed timeframes.
Resolve audit queries
100% resolution of audit recommendations within agreed timeframes.
Target met 100% resolution of audit recommendations within agreed timeframes.
19.4 6 divisional audit educational events carried out.
Preparation for the audit educational event.
6 divisional audit educational events carried out.
Target met 6 divisional audit educational events carried out.
20.Collection of revenue by the NHBRC
R814,875,000
20.1
Amount collected from registration
Collection of revenue of R4,016,250
Amount collected from registration
Target Met A total of R4 169 720 was collected for the year
20.2 Amount collected from renewal of registration
Collection of revenue of R6,288,000
Amount collected from renewal of registration
Target Met A total of R8 656 225 was collected for the year
Performance information 20.3 Amount collected from
Non-Subsidy enrolmentsCollection of revenue of R 395,838,682
Amount collected from Non-Subsidy enrolments
Target Met A total of R428 292 299 was collected for the year
20.4 Amount collected from Subsidy Home Enrolments
Collection of revenue of R140,920,466
Amount collected from Subsidy Home Enrolments
Target Met A total of R196 438 476 was collected for the year
20.5 Amount collected from Subsidy Project Enrolments
Collection of revenue of R50,751,960
Amount collected from Subsidy Project Enrolments
Target not met A total of R 16 515 161 was collected for the year
20.6 Amount collected from Late Enrolment of homes
Collection of revenue of R512,253
Amount collected from Late Enrolment of homes
Target not Met A total of R44 076 was collected for the year
20.7 Amount collected from Inspections of Non-Subsidy homes
Collection of revenue of R45,890,106
Amount collected from Inspections of Non-Subsidy homes
Target met A total of R59 189 248 was collected for the year
20.8 Amount collected from Inspection of Subsidy homes
Collection of revenue of R170,359,652
Amount collected from Inspection of Subsidy homes
Target not met A total of R1 005 579 was collected for the year
PROJECTS IMPLEMENTED TO
ENHANCE ORGANIZATIONAL
EFFICIENCY
Projects implemented
• SAP implementation( Enterprise Resource Planning)• Policy reviews• Review of Organizational Structure• Implementation of inspection model• Revamp of Human resources section• Formation of the Research and Housing Innovation
Division• Formation of Legal compliance and Enforcement
division• Review of risk register to align with Strategy
BUDGET FOR 2014/15
Total Revenue Trend
50
Revenue – Premiums and Fees
51
Restated
2014 2013R R
Insurance premium revenue
Premium received 624,730,776 606,914,343 Change in unearned premium provision (see note 10) (203,262,437) (77,522,633) Change in unexpired risk provision (see note 10) (82,407,164) 39,084,549
339,061,175 568,476,259
Fee revenue
Annual registration fees 1,614,223 1,473,638 Annual renewal fees 8,656,225 8,054,917 Registration fees 2,555,497 2,111,160 Builder manual fees 517,774 427,764 Subsidy project enrolments fees 16,515,161 34,240,457 Late enrolment fees 44,075 657,626
Document sales 1,048,900 512,333 30,951,854 47,477,895
Technical services revenue
Forensic audit, Geo-tech and rectification work 42,214,463 215,989,718 42,214,463 215,989,718
Technical provision definitions
52
The Outstanding Claims Provision (OCP) is determined at a 99.5% sufficiency
level. This is consistent with the Financial Services Board's proposed Financial
Condition Reporting requirements, which will require companies to hold liabilities
at the 75% level, and capital at 99.5%.
The OCP has been estimated by applying chain ladder techniques to a run-off
triangle of remedial work claims paid grouped by quarter of complaint. The
Bornhuetter Ferguson (BF) method was used to calculate the OCP, as this
method was most suitable to the data. The methodology is consistent with that
applied in the prior year. The OCP includes insurance claims incurred, changes
in outstanding claims provision, and provision for insurance claims incurred but
not yet reported.
Technical provision definitions
53
The Unearned Premium Provision (UPP) has been estimated using the
enrolment fee earnings curve, having deducted initial expenses which are
assumed to be earned uniformly over the first two quarters following the
enrolment date (being the estimated period between enrolment and occupation
dates). This methodology is consistent with that used in the prior year.
The Unexpired risk provision (URP) is the sum of all UPP's plus any additional
unexpired risk provision (AURP) that may be required if the unearned premium
is considered to be inadequate to pay for the unexpired risks.
Premium Earned R’ Million Trend
54
Insurance claims and loss adjustment expenditure R’ Million
55
Statement of Financial Performance Summary R’ Million
56
Actual2014
Actual 2013
Variance
Net income 733 1 180 -447
Expenditure 518 655 -137
Surplus for the year 214 525 -311
Expenditure 2013/14 Year-on-year Expenditure Trend
57
Restated
2014 2013
R R
Insurance claims and loss adjustment expenses 2,273,540 8,884,344
Inspections and Operating expenses 62,894,274 56,849,342
Technical services expenditure 26,652,774 235,913,941
Administration expenses 416,724,764 343,794,695
Asset management services 9,765,621 9,607,586
Expenses 518,310,972 655,049,908
Surplus trend 5 years R’ Million
58
Reconciliation of budget surplus with the surplus in the statement of financial performance
59
Description Actual 2013/14Approved
Budget 2013/14
Difference: Actual and Approved
Budget
Revenue
Registration fees 14,392,618 10,601,750 3,790,868 Non-subsidy enrolments 225,029,862 395,838,682 -170,808,819 Subsidy enrolments 130,546,474 191,672,426 -61,125,953 Technical and other revenue 47,683,974 129,512,253 -81,828,279 Interest Received 315,232,936 204,709,232 110,523,704 Total Revenue 732,885,864 932,334,344 -199,448,479
ExpensesOperating Expenditure 91,820,588 317,455,770 -225,635,182 General and Administration 14,509,163 30,292,945 -15,783,782 Payroll Costs 6,219,385 4,840,000 1,379,385 Permanent Staff Costs 245,534,933 297,233,600 -51,698,667 General Costs 100,358,753 95,658,934 4,699,819 Other Expenses 59,783,658 78,258,905 -18,475,248
Total Expenses 518,226,479 823,740,154 -305,513,675
Surplus / (Deficit) for the period 214,659,385 108,594,190 -504,962,154
Statement of Financial Performancefor the year ended 31 March 2014
60
Restated
2014 2013
R R
Insurance premium revenue 339,061,175 568,476,259
Fee revenue 30,951,854 47,477,895
Technical services revenue 42,214,463 215,989,718
Interest received and Investment income 218,047,369 199,183,248
Realised profit on sale of financial assets 97,185,568 143,092,105
Other income 5,425,437 6,155,467
Net income 732,885,865 1,180,374,692
Insurance claims and loss adjustment expenses 2,273,540 8,884,344
Inspections and Operating expenses 62,894,274 56,849,342
Technical services expenditure 26,652,774 235,913,941
Administration expenses 416,724,764 343,794,695
Asset management services 9,765,621 9,607,586
Expenses 518,310,972 655,049,908
Surplus from operating activities 214,574,893 525,324,784
Finance costs - 8,470
Surplus for the year 214,574,893 525,316,314
Statement of Financial Position - Assets R’ million
Restated2014 2013
R R
ASSETSNon-current assetsProperty, plant and equipment 98,259,299 36,449,456 Intangible assets 57,007,633 40,577,524 Investments 2,425,159,324 1,873,407,955
2,580,426,256 1,950,434,935
Current assetsInvestments 1,997,005,732 2,101,021,244 Inventories 181,503 243,848 Trade and other receivables 35,678,126 35,733,785 Cash and cash equivalents 147,483,450 134,506,947
2,180,348,812 2,271,505,824 TOTAL ASSETS 4,760,775,068 4,221,940,760
Investments R’ Million
62
Statement of Financial Position - Liabilities R’ Million
Restated2014 2013
R R
EQUITY AND LIABILITIESEquityAccumulated surplus 3,274,279,231 3,051,094,676 Emerging contractor reserve 20,419,828 29,029,492
3,294,699,059 3,080,124,168
LIABILITIESNon-current liabilitiesProvision for outstanding claims 30,143,782 28,546,767 Provision for unearned premium 371,762,257 226,860,411 Provision for unexpired risk 645,731,568 563,324,404
1,047,637,607 818,731,582
Current liabilitiesTrade and other payables 171,891,207 125,865,738 Provisions 3,095,266 4,537,732 Provision for outstanding claims 11,947,734 19,537,936 Provision for unearned premium 231,504,195 173,143,604
418,438,402 323,085,010 Total equity and liabilities 4,760,775,068 4,221,940,760
Technical Provisions R’ Million
64
Claims Trend 5 years R’ Million
65
Financial Notes
66
Provision for Government debt: R 15 million
Income Receive in advance: R 32,2 million
Available for sale investments: R 3,9 billion
Audit Report Unqualified
Actuarial Report at Actuarial Report at March 2014March 2014
Technical Provisions as at 31 March 2014
Enrolment fee adequacy for 2014
69
Solvency of Warranty Fund
70
Conclusion on the Solvency
71
• The results of our actuarial valuation indicate that the NHBRC
as a whole, including both subsidy and non-subsidy houses, is
solvent and is in a sound financial position as at 31 March 2014
when valued on a run-off basis.
• The actuarial liabilities are 343% funded.
• For future business, the enrolment fees charged are expected
to be sufficient to cover future expenses and liabilities for the
combined book of business (non-subsidy and subsidy homes)
assuming the current business mic of 2013/14.
THE ENDTHANK YOU